By Business Reporter
ACCORDING to FNB Namibia, the country is ranked 24th in global house price growth, when one analyses the latest Knight Frank quarterly report, which recorded that world prices had increased by 5.6 percent for the year to date, until June.
The report shows that Iceland leads the index for the second consecutive quarter, after property prices jumped 23.2 percent year-on-year. Perennial leader, Hong Kong, was not too far behind, after registering 21.1 percent annualised price growth, followed by Malta with 14.6 percent.
“The nearer term six-month and three-month data points suggest that the growth impetus is waning across most countries. By our calculations, Namibia slots into the 24th position, above Slovenia and three places above its neighbour South Africa. Namibia’s near-term data also points towards weakening growth,” FNB Analyst, Josephat Nambashu noted in the FNB housing report, released recently.
The report highlights that with the economy grinding to a lowly 1.1 percent growth last year, and as it continues to shed jobs, disposable income is under significant pressure. Macroeconomic challenges continue to weigh on the Namibian housing market, as annual price growth decelerated to 6.4 percent for the month of June.
This is a substantial decline from the 11.6 percent recorded a year ago.
This is even more evident in real price changes (Consumer Price Index inflation adjustments), which has been in the red for the past seven months, on the back of upwardly sticky housing inflation, as measured by the Namibia Statistics Agency.
“Hence, housing demand is faltering under this backdrop, and is hardly surprising that properties spend on average 24 weeks on the market, and when they eventually do sell, 98 percent sell below the original asking price. That being said, housing demand should remain weak, and affordability ought to become more challenging against this sombre macro-economic backdrop,” Nambashu said.
“This is evident in the volumes data, where for the 17th consecutive month, volume growth has remained negative; as June volumes came in 6.3 percent lower than the same period last year. Hardly surprising, the upper income segment was hardest hit, with a 43.4 percent contraction over the same period last year, and according to our Q3 Estate Agent Survey, these properties average 27 weeks on the market.”
Nambashu said that, as it currently stands, “the northern property market is the only market that registered meaningful volume growth in June”, while the central and coastal market volumes are contracting rather rapidly, as confirmed by our Q3 Estate Agents Survey.
“This is similar weakness that was evident post the global financial crisis, back in 2010, and given the current economic backdrop, coupled with limited new developments outside the northern property market, we expect volumes to remain depressed for the remainder of the year, spilling over to 2018,” Nambashu said.
He further stated that, based on FNB estimates, property price growth should decelerate to six percent in 2017, as a whole, and improve to 7.8 percent during the course of 2018, on the back of a mild economic recovery.
“Although interest rates are unwinding, the expected deleveraging will keep price movements in check, with possible downside risks from the mass housing program, as 1 942 mass housing units are ready for occupation, and a further 4 012 currently under construction.”
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